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Sinclair
Noe’s Financial Review
Thursday, October 11, 2007
DOW
– 63 = 14015
SPX – 8 = 1554
NASDAQ – 39 = 2772
DJTA – 42 = 4891
DJUA + 1 = 517
RUT – 10 = 834
The
U.S. trade deficit fell to the lowest level in seven months. The deficit
declined to $57 billion in August, down 2.4 percent from July. The improvement
reflected a 0.4 percent rise in exports, which climbed to a record $138
billion. Sales of farm products including wheat, soybeans and corn, and exports
of industrial products such as chemicals and steel both hit record levels.
Imports dropped by 0.4 percent to $195 billion; American bought fewer foreign
made cars and furniture, even as the price paid for imported oil moved higher.
The average price for crude oil in August was $68.09.
The
weekly inventory report from the Energy Department's Energy Information
Administration said crude oil supplies fell by 1.7 million barrels in the week
ended Oct. 5. Also, an International Energy Agency report concluded oil
inventories held by the world's largest industrialized
countries have fallen below a five-year average. Light, sweet crude for
November delivery rose $1.78 to settle at $83.08 a
barrel. The record high close on September 20th was $83.32, with a
record trading high of $83.90. Despite oil's recent rally, gas prices continue
to fall. At the pump, the average national price of a gallon of gas fell 0.5
cent overnight to $2.76.
Meanwhile,
the federal budget deficit fell to $162.8 billion in the just-completed budget
year, the lowest amount of red ink in five years – down from a $248 billion
dollar deficit last year.
The
Federal Reserve added about $35 billion dollars in reserves in repurchase
agreements stretching from overnight loans to two-week loans. The
overall size of the U.S. commercial paper market increased to $1.865 trillion
in the week ended Oct. 10, up $4.9 billion from the previous week. Liquidity
has not frozen, but it is still frosty.
Axel
Weber, a governing council member of the European Central Bank, said the bank
may need to raise interest rates to control inflation.
The
number of home foreclosures jumped to 223,538 in September, 99 per cent higher
than the number last year, though down 8 per cent from August. Countrywide
Financial, the largest US mortgage lender, said delinquencies as a percentage
of unpaid loans rose to 5.85 per cent from 4.04 per cent a year ago. Countrywide’s mortgage fundings for September
fell 44 percent from the same period a year ago, and the mortgage lender is now
facing a potential federal investigation over the timing of stock sales by its
chief executive.
CFC -- .52 = 18.28
In
other economic news, the Labor Department said that the number of newly laid
off workers filing claims for unemployment benefits fell by 12,000 last week to
308,000. That was a better showing than had been expected.
Interest
rate futures priced in only a 36 per cent likelihood of the Federal Reserve
cutting rates by the end of this month but the market still expects another
easing by the end of the year. Bonds moved higher today as stocks
just fell off the edge late in the session. Benchmark 10-year notes rose 4/32
in price for a yield of 4.64 percent, down 2 basis points. Yield on the 2-year
note dropped 2 basis points to 4.12 percent. The 30-year long bond was flat at
4.87 percent.
Gold
futures for December delivery rose $10.70 to $756.70
an ounce. Silver futures for December delivery climbed 31.7 cents to $13.985 an
ounce. You know the mantra dollar down gold up. We were seeing it again today,
and we finally see gold break through resistance of 750, now trading at its
highest level since Jan. 22, 1980.
Wheat
futures for December delivery rose 30 cents, or 3.5 percent, to $8.83 a bushel
on the Chicago Board of Trade – daily limit move. Demand for wheat is cutting
into inventories. Either it’s the start of a troubling, inflationary trend, or
a rare and unique event.
Several
of the nation's largest retailers cut their earnings forecasts:
Wal-Mart
raised its third-quarter profit forecast even after reporting its same-store
sales, or sales at stores open at least a year, rose a weaker-than-expected 1.4
percent in September.
WMT + 1.31 = 46.90
Target
said same-store sales increased a slim 1.2 percent,dragged
down by weak apparel sales. Target lowered its full year earnings estimates.
TGT – 1.15 = 64.62
Macy's
Inc. posted a 2.7 percent drop in same-store sales, worse than the 1 percent
projection.
M -- .66 = 33.84
Penney
reported a 4.6 percent drop in same-store sales.
JCP – 4.73 = 63.27
The
United Auto Workers strike against Chrysler was over as it began. Next up at
the negotiating table is Ford Motor. Look for a quick deal with no strike; Ford
can’t afford a strike.
F + .53 = 8.76
